China currency bill clears Senate hurdle

Measure faces steeper climb in Republican House

WASHINGTON (MarketWatch) — A bill designed to pressure China into letting the value of its currency rise cleared a procedural hurdle in the Senate on Monday, but the measure faces a tougher time in the House, and the White House is lukewarm to it.

Senate Democratic Leader Harry Reid said he expects to hold a final vote later this week. Reid, a Nevada Democrat, said the bill will “help even the playing field” and narrow the United States’s trade deficit with China.

The procedural vote to cut off debate and bring the measure to the floor passed 79-19.

A similar measure overwhelmingly passed the House last fall. But House leaders are now more cautious. Speaking to reporters on Monday, House Majority Leader Eric Cantor said he wants to hear more from the White House about the measure. He also said he wants to know if the bill would have “unintended consequences,” including on U.S. consumer prices.

The White House said Monday it is reviewing the bill and shares the goal it represents. But spokesman Jay Carney didn’t endorse the measure and said the Obama administration wants to make sure it is “effective and consistent with our international obligations.”

Some lawmakers said the bill is a risky move that could alienate one of the United States’s biggest trading partners.

“We’re actually playing with fire here,” said Sen. Bob Corker, a Tennessee Republican. The bill could start a “trade war” with China if enacted, he said.

Analysts at the Eurasia Group said Monday that House passage of the bill isn’t impossible.

“If the bill becomes law, it would risk a broader fall-out in the [U.S.-China] relationship,” wrote analysts Nicholas Consonery and Sean West. “The risk is less that China responds with an economic tit-for-tat and more that its dissatisfaction manifests in the security side of the relationship.”

Critics say that China keeps the value of its currency down and that Chinese goods sell at artificially low prices. Supporters of the Senate bill also say it could help create 1.6 million U.S. jobs.

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